Recapitalize With What?

The nation awoke to a glorious day on 29 October 2006, but by midday that day, it had become a gory tale of loss of life, yet again. That was the fourth within a year – a pity. May the Lord have mercy on the souls of the departed! The Sultan of Sokoto and his entourage, two deputy Governors, two Senators, some prominent Nigerians and other passengers died in the ADC air crash of 29 Oct. 2006. I knew the two pilots personally, having worked with them in Nigeria Airways. At least you can pardon me for being overly emotional. Furthermore, most of the people connected with ADC are my very good friends. I knew them since our flying school days in Zaria . These are men with impeccable character, who have served this country diligently and if people must know, they were never part of those that looted over $300 billion of Nigeria ’s wealth since 1966. They left Nigeria Airways to start ADC when it was apparent that mediocrity had seeped into the management of Nigeria Airways. They made a mark in aviation field, but like every facet of our country, some events were beyond the compass of their control. 

The aviation sector was capitalized from the early 1970s through 1985 and the national airline, Nigeria Airways, took the lion share. It was the pride of not only Nigeria , but that of the whole of sub-Saharan Africa , as indeed the whole of the black race. Nigeria Airways dictated the pace for most airlines in Africa with the latest technologically advanced equipments available at that time. The former British Caledonian Airways that British Airways absorbed once ordered two state-of-the-arts (Airbus 310) at that time, just because Nigeria Airways had ordered four. They had to. They were Nigeria Airways main competitor on the busy Lagos-London route. One, therefore, could not blame President Obasanjo who at the Eagle Square in Abuja , during the Labour Mayday rally four years ago, grieved over the state of Nigeria Airways. He should. After all, he was one of those that capitalized the aviation sector, particularly Nigeria Airways, during Obasanjo-1. It was he, however, who unplugged the lifesaving machine of the comatose Nigeria Airways, in Obasnjo-2.

Successive governments in Nigeria from the 1960 to when IBB (IBB again?) came in 1985, found it necessary to project the image of Nigeria , prestigiously. What better way to do that than to fly the Nigerian flag everywhere, and nobody did it better than Nigeria Airways. Buhari, in spite of the financial constraints during his regime, still found money to pay for four Airbus 310s, making Nigeria the first country in the whole of Africa to acquire the latest state-of-the-art aircraft. Nigeria , at that time, always acquired its entire fleets of aeroplanes straight from the factory. The governments before IBB’s government found it undignified to fly the Nigerian flag on anything but the best. With Nigeria Airways, Nigeria became an imposing figure in West Africa and East Africa . Not only that. A Saudia (Saudi Arabian Airlines) pilot I met in 1996 in Jeddah wondered what happened to Nigeria Airways. He said they used to be jealous of Nigeria Airways in the 80s anytime they landed with their DC 10s in Jeddah, while they were still flying the aging Boeing 707s. By 1996, however, Saudia had 123 aircraft - all the latest equipments.

Aviation is an expensive enterprise. The cost of acquiring aircraft is huge and bigger still is the cost of keeping it in the air. In the pre-SAP years, to fly to Port Harcourt from Lagos cost just #45.00 and that translated to $66.00 at that time. Also, just before SAP was introduced, by the government of IBB, all government owned companies had their government subventions withdrawn. The reason, the government was broke and therefore, they were to run on their own. They were not privatised, only commercialised but government still interfered in their running by imposing its hand-selected managers. Nigeria Airways was one of such government owned companies with soldiers running it. At that point still, Nigeria Airways did not owe a dime and its aeroplanes were top-notch in terms of maintenance, which was according to International standards. If you can, please allow me to continue this argument by assuming that these soldiers were the best managers available at the time. As it were, the day before SAP was introduced; the airfare from Lagos to Port Harcourt , as stated above, was $66.00. It, however, became $22.00, the day after SAP was introduced due to the new exchange rate.

In those days, Nigeria Airways operated four flights to Port Harcourt every day, using the 223 seat A310 aircraft. It was full all of the time and often left people behind. On the average it carried over 1500 paying passengers everyday on that route alone – to and fro. At the new SAP airfare of $22.00 per seat, the airline had a shortfall of $66,000.00 (sixty six thousand dollars) everyday on that route alone. We all know that no parts of any aeroplane are manufactured in Nigeria , not even its tyres. The cost of maintenance of Nigeria Airways aeroplanes, which was mandatory by regulations, therefore, did not change in dollar value – SAP or no SAP. Even if the aeroplanes were parked, there were some parts that needed to be changed based on the number of days on the aeroplanes. With the colossal shortfall everyday, little wonders why Nigeria Airways that did not owe before SAP, started owing on its maintenance. Its status as a government owned airline and its past records of not owing, however, encouraged creditors to extend a line of credit. Congruously, the government that was broke before SAP was now awash with money generated through the foreign exchange that was now in its favour. It, however, failed to recapitalize the vital sectors, such as Nigeria Airways, NEPA, Refineries, and etc., with its new wealth.

Three things accelerated the demise of Nigeria Airways and similarly, the other vital sectors. 1. The inability of Nigeria Airways to adjust its airfares in consonance with market value; this was on the order of the government and it lasted for two years after SAP was introduced.. 2. The rate of the collapse of naira, which was exacerbated by the installation of a non-return valve of wealth flow to foreign lands by our social engineers.  3. The interference from the government, who insisted that Nigeria Airways must service every part of Nigeria irrespective of whether the routes were viable or not. Yet, the government no longer grandfathered Nigeria Airways. From the beginning, Nigeria Airways like NEPA and all other institutions that required a large portion of foreign inputs for them to operate efficiently were doomed and it was just a matter of time. I am going to give the architects of SAP, a benefit of the doubt that whatever happened to the essential and vital services in the country after the introduction of SAP was not envisioned. Brazil ’s Varig , Ethiopia ’s Ethiopian Airlines, and similarly conditioned airlines were placed outside their respective local market forces during their countries’ trying periods and that was why they survived.

By the time the restriction, not to raise airfare by the government, was removed; the value of the naira had plummeted. The bastardisation of the naira was easy. As we capital fly, the local currency chased less and less wealth. This however dented the structure of the aviation sector. Reeling under the burden of heavy maintenance debt, the national airline became an embarrassment. Its assets overseas were seized by foreign injunctions. Members of the military junta and their friends joked about Nigeria Airways’ predicament. Babangida once wondered aloud, at the Lagos Airport , why the Elephant (Nigeria Airways logo) was not flying. If anything is forgivable, it is not the denigration of our nation flag. The government did nothing as Nigeria ’s flag of green and white that hung on the tails of seized Nigeria Airways aeroplanes littered major airports all over Europe . Nigerians using these airports were embarrassed and most of them concealed their identities. Not a single Nigerian could boast openly as Nigerians normally would. Yet, we allowed foreign nationals to mock our flag. Nations have gone to war for less, but ours was self inflicted.

So many ideas have been opined since the ill-fated ADC flight of 29 Oct. 2006. Most significant among these, is the issue of recapitalization of the aviation industry in Nigeria . Good idea, but with what capital. Hello! The capital has been siphoned out of the country and parked there. I suppose we still do not grasp the magnitude of the damage we have wreaked on ourselves. The newly completed capitalization exercise of our banks ought to be award winning. However, the combined assets of all these banks, if used to capitalize the aviation sector, would at best buy just one and a half Boeing 747-400. The United Arab Emirates (UAE) have on order, one hundred times of the equivalent. We did not only devalue our currency, we have cheapened the quality of our lives. When will our travelling public ever sniff the smell of cellophane that covers new products, again? The foreign partners that are coming into the aviation sectors still come with equipments they do not have use for – though not as old. Our banks are nothing but twinkle-twinkle little super stars. They are the parking lot of devalued wealth, while we park the real wealth outside of our borders.